Hospital CEOs expect increased healthcare spending, tax incentives & GST exemption, Health News, ET HealthWorld

Hospital CEOs expect increased healthcare spending, tax incentives & GST exemption, Health News, ET HealthWorld


Mumbai: The Union Budget 2023-24 will be presented in Parliament on February 1, 2023. The health sector needs special focus to address the ever-rising disease burden, strengthening the healthcare infrastructure both in the public and the private sector and making treatments and therapies cost-effective. Expectations from experts in the healthcare industry are directed towards taking steps and measures to improve access to quality healthcare for one and all so that treatment is easily available and accessible as well.

Invest in emergency healthcare, expand testing infrastructure in tier II-III cities

Gautam Khanna, CEO, PD Hinduja Hospital & Medical Research Centre, Mumbai, commented, “The key pillars for the sector are transformation, upgradation, and innovation. While the healthcare sector has received much-deserved attention in the Union Budget, the allocation needs to be increased to about 3 per cent of the country’s GDP. This is needed to strengthen healthcare infrastructure, especially in tier II-III cities, invest in emergency healthcare and expand testing infrastructure. The availability of a long-term financing model for a minimum of 50 beds in tier II-III cities and a minimum of 25 beds in rural areas will encourage healthcare infrastructure development in these areas. Under section 32 of the Act, the government should consider additional depreciation of up to 50 per cent for investments made to create diagnostic infrastructure. Along with this, initiatives directed towards encouraging R&D investments and tax incentives for digital health records and healthcare skill development initiatives implemented by the private sector players can be highly beneficial in increasing as well as upskilling India’s healthcare workforce are equally important. India faces a double disease burden due to the consistent rise of communicable diseases as well as non-communicable diseases. The non-communicable diseases such as heart disease, diabetes and respiratory diseases alone are expected to contribute more than 75 per cent of India’s burden by 2025.

Increasing public spending on healthcare infrastructure in tier II-III cities, rural areas

“In the run-up for the Union Budget 2023-24, to be presented in the Parliament on February 1, the healthcare industry has high expectations from the Finance Minister, especially after the pandemic which has emphasised the need to make health a top priority by individuals as well as nations. During the previous years, the government of India had undertaken various reforms for the welfare of the people. The government needs to focus on increasing public spending on healthcare infrastructure, especially in parts away from big cities focusing on preventive care, primary clinics and secondary care facilities. There must be a budgetary allocation for infrastructure creation and an increased R&D activity,” shared Raj Gore, CEO, HCG.

Focus on MVT as an organised sector is urgently anticipated

Commenting on the focus of the Union Budget 2023-24 in the healthcare segment, Dr Raajiv Singhal, Founding Member, MD and CEO, Marengo Asia Healthcare said, “We are poised at a societal level for the demands that are on the healthcare industry. We are, therefore, required to build a robust and resilient ecosystem that can cater to every demand for better service deliveries. There is an expectation of a significant increase in government health expenditure as this will enable all players to offer the best in clinical excellence at reduced costs to the end-user. Some facilities like diagnostic services, testing facilities, and path labs in rural parts are expected to be enhanced to provide quality healthcare to all and in direction, the PPP model can be further explored. The government is focusing on rationalising GST for the healthcare industry, and this could open doors for increased investments, consequently bringing down costs for the customers/ patients. Higher investments in mental wellness, nutrition, education, professional skills and employment opportunities will further augment the healthcare industry. A sharper focus on enhanced policy support to further develop medical value travel to India is urgently required. Currently, India is amongst the top four destinations as a preferred one globally for medical tourism a focus on MVT as an organised sector is urgently anticipated. Last but not least, digitisation of the healthcare industry as a proven option for accessing quality healthcare is demanding investments.

Encouraging home-grown innovations will help achieve UHC

“We expect the budget allocation to the healthcare sector to be increased significantly, this year. In the Economic Survey of 2022, India’s public expenditure on healthcare stood at 2.1 per cent of GDP in 2021-22 against 1.8 per cent in 2020-21. In this FY, it needs a further jump to significantly increase allocations towards various schemes under the Ayushman Bharat umbrella, and others. Alongside, as 80 per cent of the medical devices used are imported, it would be great if the Finance Minister can reduce customs duties and remove health cess on imported medical devices. This is very important in terms of making a larger population accessible to new-age medical technologies,” stated Himesh Joshi, Co-founder and CEO, Ayu Health Hospitals.

“The focus of the Union Budget 2023-24 should be strengthening healthcare infrastructure and manpower. Promoting the indigenous medical device industry under the ‘Make in India’ initiative to reduce medical device import and healthcare costs. Also, the acceleration of personal health record creation through ABHA number will improve the accessibility and quality of healthcare,” expressed Jitendra Haryan, CEO, Jaslok Hospital & Research Centre.

Joshi further added, “The last two years have highlighted the gaps in our country’s healthcare infrastructure at various levels. Access to quality healthcare, pricing transparency and patient experience were major challenges the healthcare sector was facing. As an innovative healthcare solutions provider, we expect the government to focus more on encouraging home-grown innovations, which can help the country achieve its universal healthcare mandate.”

Offer tax breaks for investments in the healthcare sector

Santosh Marathe, Regional CEO – Western Region, Apollo Hospitals said, “Firstly the public health authorities should be applauded for the work undertaken during the COVID-19 pandemic & inoculation drives. The private hospital network also undertook excellent timely initiatives with the public-private partnerships (PPP) in supporting the cause. This year, the Union Budget is of immense importance for the economy that is steadily getting back on track following the contraction caused by two pandemic-hit years. Currently, the private healthcare network contributes significantly to the provision of healthcare services in India, but the healthcare allocations to the GDP continue to remain around 2 per cent which needs to be enhanced significantly in line with the cost of inflation exposed to the providers. Secondly, the government schemes covered under the state & national frameworks including the Ayushman Bharat needs to provide differential pricing for providers with high quality & better outcomes. Currently, there is no incentive offered for quality of care or the high-end equipment invested by the providers.”

Furthermore, in western countries there is a concept of ‘Certificate of Need’, wherein new setup approvals are provided as per zoning of areas in a particular city. A similar approach needs to be undertaken in India to prevent the redundancy of resources and skewed dominance of setups in one zone only. This initiative will distribute access to care per the public health requirements while safeguarding the viability for the running of private healthcare providers. Lastly with a very high prevalence of non-communicable diseases (NCD) & infectious diseases (ID), the tax incentives should be strengthened both for the general public and service providers.”

Healthcare is crucial for India to reach the $30 trillion economic target by 2047. A healthy population can only sustain the demographic dividend, which is expected to peak around 2041. To help with this, the government could offer tax breaks for investments in the healthcare sector.

“Another matter that the budget could take into account is the scarcity of healthcare professionals in smaller cities and towns. The budget could place a focus on the training and development of healthcare professionals and encourage them to work in tier II-III centres by providing tax rebates and other incentives. The budget could also focus on India’s eye health, a frequently overlooked topic, especially in tier II-III cities. There could be fund allocation for the setting up of new healthcare facilities, upgrading existing ones, providing financial assistance and broadening government schemes to promote the inclusion of larger sections of the population in smaller towns and cities. Such actions will greatly increase the accessibility of cutting-edge ophthalmological care throughout India, stated Aakash Sachdev, Managing Director, Foundation Holdings and Director, ASG Eye Hospitals (ASG).

Healthcare budget allocation in the percentage of GDP

It is widely proposed that the government should increase the GDP on healthcare to 3 per cent.

“Health is a non-negotiable component of a country’s state. One of the biggest programmes to change the face of the industry is a collaborative approach to enhance the outcomes of the investments. A collaborative approach of healthcare providers and the government can impact service deliveries to an optimised extent and consequently, impact the costs to the patients as well. The government is taking significant steps towards these ends to enhance healthcare providers’ efficiency, which will consequently impact the GDP. We need to step up collaborations so that healthcare stakeholders multiply to bring down the costs to the end user,” commented Dr Singhal.

Adding to Dr Singhal’s statements, Gore stated, “India’s public healthcare spending is one of the lowest in the world and on the other hand out of pocket, health expenditure in India is one of the highest in the world directly contributing to the increase in poverty. After a steady increase in public health expenditure during the period from 2004-2018, it has declined to just above 1 per cent in recent years. To reduce disproportionately higher out-of-pocket spending, government spending on health should be more than doubled to 2.5-3 per cent as also recommended by the 2021 Economic Survey.”

Sachdev believes that to meet the government’s stated goal of spending 2.5 per cent of GDP on healthcare by 2025, the allocation for this year should aim to be around 2.5 per cent of GDP. Haryan as well is of the view that at least 2.5 per cent with a gradual increase to take it up to 5 per cent of GDP in the next 4-5 years.

Tax incentives for the sector

“We are anticipating indirect and direct tax breaks for companies that engage in healthcare infrastructure, tax exemptions for healthcare providers, and further tax relief on critical consumables (such as IOLs) this year to encourage greater private sector involvement in the healthcare sector across India. Such measures will pave the way for greater access and inclusion of larger sections of the population to better quality localised healthcare,” voiced Sachdev.

“Both existing and new healthcare projects require lower-cost financing through tax incentives. If the healthcare industry is classified in the same sectors as National Priority Sector, banks will have the flexibility to lend to private healthcare institutions at lower rates over longer periods. The government can also consider extending tax benefits under 35AD of the Income Tax Act, especially in tier II-III cities with hospitals with a minimum of 25+ beds and in tier I cities with hospitals with a minimum of 50+ beds. For the healthcare providers investing large amounts of money to expand care and diagnostic services, the government can provide significant tax benefits to enable them to provide enhanced quality healthcare to all,” mentioned Dr Singhal.

“GST which was recently introduced on healthcare services should be reversed. Additionally, import duty on medical equipment is one area where some relaxation can happen,” voiced Haryan.

Adding to this Gore shared, “The government has been playing a significant role in making healthcare affordable by increasing population coverage under government schemes from 3 per cent to 32 per cent in the last 15 years. The government now needs to work towards reducing customs duties and GST on critical capital-intensive equipment, reagents/ consumables used for cancer diagnostics, and anti-cancer drugs. Allocation of resources specifically towards scaling up HCWs and equipping them with trained staff and cancer screening tools will enable early detection and accurate staging of cancer.”

Khanna concluded, “Increasing tax exemptions for preventive health check-ups from the current limit of Rs 5,000 to Rs 20,000. Further, allowing medical reimbursement exemption for salaried employees to the tune of Rs 1,00,000 per annum will be a welcome move aimed at prioritising preventive healthcare in India. The progress and impact of the various healthcare initiatives should be tracked to enable further decision-making, identify gaps and implement course correction measures where needed.”





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